JP Morgan has agreed to pay $5.1bn (£3.2bn) to resolve claims it misled mortgage lenders before the housing crash.
The deal settles a lawsuit brought by American regulators over the quality of mortgages sold to US loan giants Fannie Mae and Freddie Mac between 2005 and 2007, Sky News reports.
The Federal Housing Finance Agency accused America's biggest bank of causing "billions of dollars" in losses to the two mortgage finance companies.
The two settlements - one of $4bn and another of $1.1bn - is less than half the amount JP Morgan is expected to pay for mortgage-related violations.
The $4bn fine relates to $33.8bn in residential mortgage-backed securities sold by JP Morgan to Fannie and Freddie between 2005 and 2007.
The remaining $1.1bn concerns claims JP Morgan made about single-family mortgages it sold Fannie and Freddie between 2000 and 2008.
JPMorgan "falsely" told Freddie and Fannie the mortgages met the two agencies' standards for quality.
In reality, the assets were much lower quality than claimed. Many loans that were billed as safe later defaulted or were foreclosed.
The FHFA said JPMorgan's conduct "constitutes negligent misrepresentation, common law fraud and aiding and abetting fraud".
The securities were sold to Fannie and Freddie by JP Morgan and also by Bear Stearns and Washington Mutual, which were bought by the bank in 2008.
FHFA Acting Director Edward J DeMarco said: "This is a significant step as the government and JP Morgan Chase move to address outstanding mortgage-related issues."
JP Morgan is expected to pay a total of $13bn for mis-selling mortgage-backed securities in the run up to the 2008 financial crisis, say US reports.
A tentative deal has reportedly been reached between JP Morgan and the US Justice Department.
If the deal is finalised, it would be the biggest settlement of its kind ever paid by a US company.
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